CPP goes down under

Think big, think global, think long term and don’t get caught up with short-termism.

There is a well-known gentleman in Omaha, Warren Buffett, who holds those views. And so does the CPP Investment Board, which has set analysis and governance standards that are the envy of virtually every other pension fund.

The CPPIB philosophy was detailed in Sydney, Australia, Tuesday, a town and country very familiar to this columnist, in a speech given by Mark Wiseman, the fund’s chief executive. Wiseman is continuing a CCPIB connection: one year earlier, David Denison, the former CEO was in Sydney making a speech.

Australia has, and will continue to be, a major destination for ­­CPPIB investment dollars: $6.2-billion at last count with another $1-billion in the development stage. At end of 2012, 3.6% of the fund’s $172.6-billion of assets, was invested in Australia, a%age that represents 1.5 times Australia’s weight in the global market capitalization and share of global GDP. “So, by any measure, we are substantially overweight Australia … and we are here in scale because we believe that this is where the puck is and is going to be for decades to come,” said Wiseman in a speech to the Canadian Australian Chamber of Commerce.

Some of the CPPIB’s major investments include: the Westlink M7 toll road (that runs in and around Sydney) and Broadcast Australia (a former federal government entity that owns and operates of one of the world’s most extensive terrestrial broadcast transmission networks and which has been owned by CPPIB since 2009. It was recently awarded the contract to provide wireless networks on the Toronto subway.) Some of its other major investments are through partnerships, including one that will develop two waterfront office towers in Sydney, and another that has acquired a stake in two major shopping centres.

Australia is also the country where CPPIB has forged strong relationships:

The Goodman North American Partnership. About US$890-million has been invested (about half from CPPIB) to target logistics and industrial properties in North America;

The Goodman China Logistics Holding. With $800-million from CPPIB the capital is targeted at logistics properties in China;

A partnership with Westfield that covers ventures in London (near the site of the 2012 Olympics) and North America (where it is now a large owner of regional shopping centres.

“These partnerships are great examples of how CPPIB is forging relationships with Australian companies to our mutual benefit on the global stage,” said Wiseman, adding that the CPPIB needs “solid long-term opportunities in both our home countries and abroad to match long-term liabilities” — a comment that implies those opportunities will be found in the real economy and not in the stock markets.

In his speech, Wiseman had one lament: the gap between the need for vital infrastructure renewal projects (that run into the trillions of dollars) and the long term capital to finance them – though he did note Australia’s “superior performance” in attracting long-term capital.

Certainly the Aussies push: At a conference outlying infrastructure opportunities in Australia held in Canada late last year, the big local pension funds were everywhere.